Comcast filing defends Time Warner Cable deal

 
Press Article Source:BattleCreekEnquirer.com

Comcast’s defense of its massive proposal to buy Time Warner Cable intensified this week as the media giant issued a formal response Tuesday to the Federal Communications Commission’s review of the deal’s antitrust impact.

“By combining the companies’ technological developments and know-how, their geographic reach, and Comcast’s strong balance sheet and investment culture, the post-transaction company will improve the experience for customers today and forge ahead to meet future challenges and needs,” according to a redacted copy of the public interest statement Comcast filed with the agency Tuesday.

Facing a growing number of customers flocking to streaming video and content providers demanding more payment for programs, Time Warner Cable agreed in February to be bought by Comcast for $45 billion. The acquisition would give Comcast access to key media markets that it has coveted, including New York and Los Angeles, and occupy about 40% of the Internet service market, or about 32 million customers. It would also hold about 30% of the pay-TV market.

The deal’s opponents – including consumer advocates, satellite TV-Internet operators to broadcasters, cable networks and writers – argue that the merger would lead to higher prices, fewer Internet service choices and further cable network consolidation.

Federal regulators, including the FCC and the Department of Justice, will review the proposal and are expected to issue a ruling by the end of the year. Last week, Comcast submitted further information for a pre-merger notification with the Department of Justice. David Cohen, Comcast’s executive vice president, will testify Wednesday before the U.S. Senate Judiciary Committee.

Comcast has said repeatedly its technology and operational expertise will enhance TWC’s lackluster service, particularly in broadband Internet. The company repeated the stance Tuesday, pointing to its “fully digital network” and readiness to “accelerate network upgrades in the TWC markets.”

Comcast’s most popular broadband tier is 25 megabits per second, while TWC’s is 15 Mbps. Comcast is “marching toward 1 million Wi-Fi hotspots, while TWC has a much more limited number of hot spots with only 29,000,” Comcast’s Cohen said in a company blog post Tuesday that summarized the FCC filing.

For the video component of its service, Comcast plans roll out its well-received set-top box, X1, to TWC markets if the merger is approved.

While the combined company’s large market size is a concern, the deal’s opponents also say the new Comcast would have massive leverage in negotiating with broadcast and cable networks, as well as other content providers and suppliers. Comcast already owns NBCUniversal, 30 cable networks, 26 local TV stations and a stake in streaming service Hulu.

As it bought a majority stake in NBC Universal, Comcast agreed in 2011 to several FCC-mandated restrictions that last seven years, ranging from broadening Internet access to low-income households and not discriminating against third-party programs that seek access to Comcast’s distribution channels. Comcast has said it’ll extend these “net neutrality” concessions to TWC.

Its low-income broadband adoption program, Internet Essentials, has over 1.2 million customers and the plan will be extended to TWC markets, Cohen said.

In the small and midsize business market, Comcast and TWC see themselves as underdogs that can offer “meaningful competition,” Cohen said.

Each company has “had some success – capturing maybe 10 to 15 percent of the SMB market – but its limited geographic scope has constrained its ability to offer truly meaningful competition to the established providers,” he wrote. “Competition in the business market has been long in coming, and we can take it to a larger scale.”

Contrasting its deal with consolidation in the wireless market — wherein an acquisition of a carrier by a rival would eliminate a participant in local markets — Comcast repeated Tuesday its earlier assertion that it does not compete with TWC in any area. Comcast has agreed to “divest” about 3 million customers if the merger is approved.

That satellite operators have added to their total customer base while Comcast and TWC have lost video customers underscores the existing alternatives for pay-TV customers, Comcast said. Since 2009, Dish Network and DirecTV have added 1.7 million subscribers while cable operators lost 7.3 million.

But customers generally are reluctant to deal with multiple vendors for their TV-Internet-phone service, the deal’s critics say, and the Internet connection provided by satellite operators are less than optimal.

Stiffening competition from streaming companies and set-top TV makers, including Amazon, Netflix and Apple, also has made the traditional boundaries between media and technology “obsolete,” Cohen said.

Eight of the nine expansion markets announced by Google Fiber — the search engine giant’s project to roll out broadband Internet in U.S. cities — are in Comcast or TWC areas, Comcast noted. “When we have the scale to increase investment in more markets, our competitors will invest too,” Cohen said.

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